How does a stock market crash? What are the after effects?

FUTURE:

"SELL SKSMICRO BELOW 465 TGT 450.00 SL 472.00"

"BUY AMTEKAUTO ABOVE 160.00 TGT 165.00 SL 157.00"

CASH:

"SELL VGUARD BELOW 990 TGT 965.00 SL 1015.00"

" BUY WOCKPHARMA  ABOVE 1300.00 TGT 1340.00 SL 1290.00"

A stock market crash is whenever the stock market loses more than 10% in a day or two. This differentiates it from a stock market correction, which is usually a loss of 10% or less over many days. You can measure the percentage losses in a stock market crash with any of the major stock market indices: the Dow Jones Industrial Average, the S&P 500 or the NASDAQ. Crashes are dangerous. They can lead to a bear market, which is an extended stock market decline that typically lasts 18 months.

Recognize the Warning Signs  

The market usually crashes after an extended bull market, which is an upswing in stock prices. Greed drives stock prices above the underlying worth of the company, as measured by earnings. Stock prices that aren't supported by earnings or underlying economic reality is how you can tell when the stock market is about to crash. There's a feeling of "I've got to get in now or I'll miss the profits," which leads to panicked buying. Usually, the individual investor will buy right at the market peak. The stock market crash is the reverse, panicked selling. That's when the individual investor, if driven by fear, usually sells. When investors are driven by emotion, not financials, then that emotion can reverse quickly, turning into panicked selling. That's the symptom of a stock market crash.

What Not to Do

Buying high and selling low is a sure-fire way to lose money in the stock market. That's why it's extremely difficult to time the market. By the time you get the information to make a move, institutional investors and traders have moved on.

What's the solution? Keep a well-diversified portfolio of stocks, bonds Rebalance it as market conditions change. During a stock market crash, stocks will make up less of your portfolio, while stocks will make up more. Sell some of the bonds to buy more stocks, now that the prices are down. When they go up again and they always do you will profit from the upswing in stock prices. You've sold some of your bonds, so you won't lose as much when those prices fall during the bull market. Even the most sophisticated investor finds it difficult to recognize a stock market crash until it is too late.